ACIT, CIT-2(1), Kolkata, Kolkata V. M/s BNK E Solution Pvt. Ltd., Kolkata

ITA 1613/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1727 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 15-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 10-08-2016
• Court: TRIBUNAL
• Department Lawyers: BANIBRATA DUTTA A DDL
• Assessee Lawyers: D S DAMLE
• Keywords: Business income; Depreciation; Tangible material; Difference of opinion; Unabsorbed depreciation; Change of opinion; Reassessment proceedings
• Section: 143(3); 37(1); 194C; 148; 2

Judgement Text

ITA NO.1613/KOL/2017-& CO.02/KOL/2016-M/S. BNK E SO LUTION PVT. LTD. A.Y.2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NO. 1613/KOL/2016 ASSES SMENT YEAR : 2006-07 A.C.I.T., CIRCLE-2(1) -VS.- M/S. BNK E SOLUT ION PVT.LTD. KOLKATA KOLKATA [PAN : AABCB 3209 N] (APPELLANT) (RESPONDENT) C.O.NO.02/KOL/KOL/2017 (A/O I.T.A NO. 1613/KOL/2016) ASSES SMENT YEAR : 2006-07 M/S. BNK E SOLUTION PVT. LTD. -VS.- A.C.I.T., CIRCLE-2(1), NOW KNOWN AS GOPI VALLABH KOLKATA. SOLUTIONS (P) LTD. KOLKATA [PAN : AABCB 3209 N] (CROSS OBJECTOR) (RESPONDENT) FOR THE DEPARTMENT : SHRI BANIBRATA DUTTA, A DDL. CIT(DR) FOR THE ASSESSEE : SHRI D.S.DAMLE , FCA DATE OF HEARING : 15.05.2017 DATE OF PRONOUNCEMENT : 19.05.2017. ORDER PER N.V.VASUDEVAN, JM I.T.A.NO.1613/KOL/2016 IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 07.05.2016 OF CIT(A)-23, KOLKATA, RELATING TO AY 20 06-07. THE ASSESSEE HAS RAISED CROSS OBJECTION AGAINST THE VERY SAME ORDER OF CIT( A). 2. IN THE CROSS OBJECTION THE ASSESSEE HAS CHALL ENGED THE VALIDITY OF INITIATION OF RE- ASSESSMENT PROCEEDINGS BY THE AO U/ 147 OF THE ACT. AS FAR AS THE APPEAL OF THE REVENUE IS CONCERNED THE REVENUE IS AGGRIEVED BY TH E ACTION OF CIT(A) IN ALLOWING ITA NO.1613/KOL/2017-& CO.02/KOL/2016-M/S. BNK E SO LUTION PVT. LTD. A.Y.2006-07 2 DEDUCTION U/S 10A OF THE INCOME TAX ACT, 1961 (ACT) WITHOUT SETTING OFF THE BROUGHT FORWARD UNABSORBED DEPRECIATION AND BROUGHT FORWARD BUSINESS LOSS. 3. THE FACTS WITH REGARD TO THE GROUNDS RAISED B Y THE ASSESSEE IN THE CROSS OBJECTION ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE B USINESS OF RENDERING ITES. FOR A.Y.2006-07 THE ASSESSEE FILED RETURN OF INCOME ON 28.11.2006 SHOWING NIL INCOME. THE ASSESEE HAD CLAIMED DEDUCTION U/S 10A OF THE AC T OF RS.3,28,62,391/-. THE SAID SUM WAS ARRIVED AT BY THE ASSESSEE IN THE FOLLOWING MANNER : CALCULATION OF DEDUCTION U/S 10A TOTAL TURNOVER 199,962,276 LESS : OTHER INCOME 3,63,314 SALES PROCEEDS OF THE UNDERTAKING 199,598,962 LESS : SALES IN INR 90,66,866 TOTAL EXPORT TURNOVER 190,532,096 LESS: FOREIGN CURRENCY NOT RECEIVED DURING PRESCRIBED PERIOD 70,63,986 EXPORT TURNOVER 183,468,110 AMOUNT OF DEDUCTION U/S 10A PROFIT OF THE BUSINESS UNDER X TURNOVER TOTAL TURNOVER 35816789 X 183468110 199962276 = RS.32,862,391 4. THE AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT BY ORDER DATED 23.12.2008 AND HE DETERMINED THE DEDUCTION U/S 10A OF THE ACT BY ADOPTING THE PROFITS OF BUSINESS OF 10A AT RS.3,51,14,628/- AS A GAINST RS.3,58,16,789/- CONSIDERED BY THE ASSESSEE IN ITS COMPUTATION OF DEDUCTION U/S 10A OF THE ACT. 5. THE AO ISSUED A NOTICE U/S 148 OF THE ACT DAT ED 03.11.2010 FOR MAKING AN ASSESSMENT U/S 147 OF THE ACT. THE REASONS FOR RESO RTING TO PROCEEDINGS U/S 147 OF THE ACT WERE THAT AFTER COMPLETION OF ASSESSMENT IN THE CASE OF THE ASSESSEE, IT WAS SUBSEQUENTLY ASCERTAINED THAT THE ASSESSEE COMPANY HAD BROUGHT FORWARD BUSINESS LOSS OF RS.43,91,870/- (ASSESSMENT YEAR 04-05), UNABSORB ED DEPRECIATION OF ITA NO.1613/KOL/2017-& CO.02/KOL/2016-M/S. BNK E SO LUTION PVT. LTD. A.Y.2006-07 3 RS.2,47,02,614/- ( ASSESSMENT YEAR 03-04) AND DEPRE CIATION OF RS.2,20,25,827/- ( A.Y. 04-05) . AS PER THE ORIGINAL ASSESSMENT ORDER THE A SSESSEE COMPANY WAS ALLOWED DEDUCTION U/S. 10A OF RS.3,22,18,149/- FROM TOTAL I NCOME OF RS.3,51,14,628/ BEFORE SETTING OFF AFORESAID BROUGHT FORWARD LOSSES. BROUG HT FORWARD LOSSES SHOULD HAVE BEEN FIRST SET OFF AGAINST TOTAL INCOME OF RS.3,51, 14,6 28/ AND AFTER THAT DEDUCTION U/S 10A OF RS,3,22,18,149/- SHOULD HAVE BEEN ALLOWED. AS TH IS WAS NOT DONE, THE IRREGULARITY IN SET OFF OF LOSSES LEADS TO UN-DUE DEDUCTION FOR AN AMOUNT OF RS.3,22,18,149/- UNDER SECTION 10A OF THE ACT. ACCORDINGLY, ASSESSMENT IN THIS CASE IS BEING RE-OPENED UNDER THE PROVISIONS OF SECTION 147 OF THE INCOME TAX ACT , 1961 AFTER OBTAINING NECESSARY APPROVAL FROM THE ADDITIONAL COMMISSIONER OF INCOME -TAX, RANGE-2, KOLKATA. 6. IN THE RE-ASSESSMENT PROCEEDINGS THE ASSESSEE TOOK A STAND THAT DEDUCTION U/S 10A OF THE ACT IS AN EXEMPTION PROVISION AND THEREFORE THE SET OFF OF CARRY FORWARD OF LOSS AS CONTEMPLATED U/S 70(1) AND SEC.72 OF THE ACT ARE NOT APPLICABLE AND THEREFORE THE CLAIM AS ORIGINALLY ALLOWED IN THE ASSESSMENT U/S 1 43(3) OF THE ACT SHOULD BE RETAINED. THE AO, HOWEVER, DID NOT AGREE WITH THE AFORESAID C ONTENTION OF THE ASSESSEE AND HE HELD THAT THE PROVISION OF SECTION 10A OF THE ACT W AS DEDUCTION PROVISION AND HE ACCORDINGLY COMPUTED THE DEDUCTION U/S 10A OF THE A CT AS FOLLOWS :- SINCE NO DIVISIBLE INCOME IS ASSESSED AFTER SET O FF OF BROUGHT FORWARD BUSINESS LOSS, BROUGHT FORWARD UNABSORBED DEPRECIATION AND B ROUGHT FORWARD DEPRECIATION, DEDUCTION FOR AN AMOUNT OF RS.3,22,18,140/- WHICH W AS ERRONEOUSLY ALLOWED U/S 10A OF THE INCOME TAX ACT, 1961 AS PER THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) ON 23.12.2008 IS DENIED. ACCORDINGLY TOTAL I NCOME OF THE ASSESSEE IS COMPUTED AS BELOW :- NET PROFIT AS PER P/L A/C. RS.3,25,80,667/- ADD: DEPRECIATION AS PER COMPANIES ACT RS.1,50,27, 704/- RS.4,76,18,371/- LESS: DEPRECIATION AS PER INCOME TAX ACT RS.1,24 ,77,301/- BALANCE RS.3,51,41,070/- LESS: INTEREST INCOME TO BE CONSIDERED SEPARATELY RS. 26,442/- BALANCE CARRIED OVER RS.3,51,14,628/- ADD: DISALLOWANCE U/S 40(A) AS PER ITEM 12(F) OF TH E RETURN OF INCOME SUBMITTED RS. 6,75 ,719/- ADD: DISALLOWANCE AS PER THE ORIGINAL ASSESSMENT OR DER ON ACCOUNTS OF :- (I) U/ S 36(1)(V)(A) FOR DELAY IN DEPOSITS OF CONTRIBUTIONS TO PF/ESI RS. 5,830/- ITA NO.1613/KOL/2017-& CO.02/KOL/2016-M/S. BNK E SO LUTION PVT. LTD. A.Y.2006-07 4 (II)U/S 40(A)(IA) FOR NON DEDUCTION OF TDS U/S 194C 194J RS.5,45,692/- (II) U/S 37(1) ON ACCOUNT OF INADMISSIBLE DONATION RS. 15,000/- RS. 5,66,522/- TOTAL INCOME FROM BUSINESS RS.3,63,56,869/- LESS: BROUGHT FORWARD BUSINESS LOSS SET OFF RS.43,9 1,870/- LESS: BROUGHT FORWARD UNABSORBED DEPRECIATION SET OFF RS.2,47,02,614/- LESS: BROUGHT FORWARD DEPRECIATION SET OFF TO THE TUNE OF REMAINING INCOME FROM BUSINESS RS.72,62,385/- RS.3,63,56,869/ - INCOME FROM BUSINESS AFTER SET OFF OF BUSINESS LOSS AND DEPRECIATION N I L INCOME FROM OTHER SOURCES RS. 26,442/ - TOTAL INCOME RS. 26,440/- LESS: DEPRECIATION SET OFF OUT OF REMAINI NG AMOUNT OF (RS.2,20,25,827/- LESSRS.72,62,385/-) RS.1,47,63,442/- THUS ALLOWED TO CARRY F ORWARD. 7. AGGRIEVED BY THE AFORESAID ORDER OF AO THE A SSESSEE FILED AN APPEAL BEFORE CIT(A). THE ASSESSEE CHALLENGED THE VALIDITY OF INI TIATION OF PROCEEDINGS U/S 147 OF THE ACT ON THE GROUND THAT THE AO WHILE COMPLETING THE ORIGINAL ASSESSMENT AND FORMED A PARTICULAR OPINION ON THE ASSESSEES CLAIM OF DEDUCTION U/S 10A OF THE ACT AND ON THE BASIS OF THE SAME FACTS WITHOUT NEW MATE RIAL COMING TO THE NOTICE OF THE AO, HE HAS INITIATED PROCEEDINGS U/S 147 OF THE AC T PURELY ON THE BASIS OF CHANGE OF OPINION AND THEREFORE INITIATION OF RE-ASSESSMENT P ROCEEDINGS ARE NOT VALID. THIS PLEA WAS REJECTED BY CIT(A) BY OBSERVING AS FOLLOWS :- 1. I HAVE CONSIDERED THE ISSUE EMANATING FROM THE REOPENING OF THE CASE OF THE APPELLANT, AND HIS SUBMISSION ALONG WITH THE LEGAL PRECEDENTS, I FIND THAT THERE CANNOT BE A CASE OF CHANGE OF OPINION, AS THE LD. A O APPEARS TO HAVE NOT EXPLICITLY EXPRESSED ANY OPINION AT ALL. THE AO HAS PASSED THE ORDER IN A MECHANICAL WAY WITHOUT ANY SPECIFIC OPINION. 2. IN THE CIRCUMSTANCES, I AM OF THE CONSIDERED VIE W THAT IT CANNOT BE SAID THAT THERE WOULD NOT BE A DIFFERENT OR MORE CORRECT METH OD POSSIBLE WHICH THE AO IS PRECLUDED FROM ADAPTING, IN A SITUATION WHERE HE TA KES A SECOND LOOK ON ACCOUNT OF WHAT APPEARS TO HIM A BETTER OR LEGALLY SOUND UN DERSTANDING OF THE APPLICABLE LAW. IN THE CASE OF YUVRAJ VS. UNION OF INDIA (BOM. ) (2009) 315 ITR 84, IT HAS BEEN HELD BY THE HONBLE HIGH COURT THAT THE POINTS NOT DECIDED WHILE PASSING ASSESSMENT ORDER UNDER SECTION 143(3), DO NOT LEAD TO A CASE OF CHANGE OF OPINION. ITA NO.1613/KOL/2017-& CO.02/KOL/2016-M/S. BNK E SO LUTION PVT. LTD. A.Y.2006-07 5 THEREFORE THIS ADDITIONAL GROUND TAKEN BY THE APPEL LANT FAILS, AND IS REQUIRED TO BE DISMISSED. 8. AS FAR AS THE COMPUTATION OF DEDUCTION U/S 1 0A OF THE ACT IS CONCERNED THE CIT(A) AGREED WITH THE CONTENTION OF THE ASSESSEE T HAT SECTION 10A PROVISIONS ARE EXEMPT PROVISION. HAVING CAREFULLY CONSIDERED THE VARIOUS ISSUES EM ANATING FROM THE ARGUMENTS OF THE LD AO AND THE LD A,R,I FIND THAT THE POINT U NDER CONSIDERATION HAS BEEN SQUARELY COVERED BY THE JUDGMENTS OF THE HON'BLE MU MBAI HIGH COURT IN CIT VS BLACK & VEATCH CONSULTING (PVT LTD) 348 ITR 72 AS W ELL AS THE HON'BLE KARNATAKA HIGH COURT IN CIT VS YOKOGAWA INDIA LTD [ 2112] 204 TAXMAN 305, ALO 341 ITR 385 ( 2012) . IT IS QUITE WELL LAID DOW N THAT THE VARIOUS HIGH COURTS AND HON'BLE TRIBUNALS HAVE HELD THAT DEDUCTION UNDE R SEC 10A HAS TO BE GIVEN EFFECT AT THE STAGE OF COMPUTING THE PROFITS AND GA INS OF BUSINESS BEFORE APPLYING THE PROVISIONS OF SEC 72. IN THE CASE OF CIT VS YOK OGAWA INDIA LTD (KARNATAKA HIGH COURT) RULES AS FOLLOWS: S. 10A/B CONTINUE TO 'EXEMPT' PROFITS & SO LOSS OF OTHER UNITS (ELIGIBLE & NON-ELIGIBLE, INCLUDING B/F LOSS) NOT LIABLE FOR SE T-OFF AGAINST S. 10A/B PROFITS 'THE HIGH COURT HAD TO CONSIDER TWO ISSUES FOR A Y 2001-02 & ONWARDS: WHETHER (I) THE LOSS INCURRED BY A NON-ELIGIBLE UNI T & (II) THE BROUGHT FORWARD UNABSORBED LOSS &' UNABSORBED DEPRECIATION OF THE E LIGIBLE UNIT HAS TO BE SET- OFF AGAINST THE PROFITS OF THE ELIGIBLE UNIT BEFORE ALLOWING DEDUCTION U/S 10A/10B. HELD ANSWERING BOTH QUESTIONS IN FAVOUR OF THE ASSESSEE: (A) ON ISSUE (I), S. 10A WAS AMENDED BY THE FA 2000 W.E.F. 1.4,2001 TO CONVERT IT FROM AN 'EXEMPTION' PROVISION TO A 'DEDUCTION' P ROVISION. S, 10A ALLOWS DEDUCTION 'FROM THE TOTAL INCOME'. THE PHRASE 'TOTA L INCOME' IN S. 10A MEANS 'THE TOTAL INCOME OF THE STP UNIT' AND NOT 'TOTAL I NCOME OF THE ASSESSEE', CONSEQUENTLY, S. 10A DEDUCTION HAS TO BE GIVEN BEFO RE COMPUTING THE 'PROFITS & GAINS OF BUSINESS' UNDER CHAPTER IV. THIS PROPOSI TION IS IN LINE WITH THE FORM OF RETURN, ALLOWING DEDUCTION AT THE EARLIEST STAGE OF BUSINESS INCOME COMPUTATION WILL BLUR THE DIFFERENCE BETWEEN 'COMME RCIAL PROFITS' AND 'TAX PROFITS'. FURTHER, THOUGH S, 10A WAS AMENDED TO MAK E IT A 'DEDUCTION' PROVISION, IT CONTINUES TO REMAIN IN CHAPTER III AN D WAS NOT MOVED TO CHAPTER VI-A. THE RESULT IS THAT EVEN NOW S. 10A IS IN THE NATURE OF AN 'EXEMPTION' PROVISION AND THE PROFITS OF THE ELIGIBLE UNIT HAVE TO BE DEDUCTED AT SOURCE LEVEL AND DO NOT ENTER INTO THE COMPUTATION OF INCOME, CO NSEQUENTLY, THE LOSSES SUFFERED BY NON-ELIGIBLE UNITS CANNOT BE SET-OFF AG AINST THE ELIGIBLE PROFITS; (B) ON ISSUE (II), S. 10A(6) AS AMENDED BY THE FA 2 003 W.R.E.F. 1.4.2001 PROVIDES THAT DEPRECIATION AND BUSINESS LOSS OF THE ELIGIBLE UNIT RELATING TO THE ITA NO.1613/KOL/2017-& CO.02/KOL/2016-M/S. BNK E SO LUTION PVT. LTD. A.Y.2006-07 6 AY 2001-02 & ONWARDS IS ELIGIBLE FOR SET-OFF & CARR Y FORWARD FOR SET-OFF AGAINST INCOME POST TAX HOLIDAY. THIS AMENDMENT DOE S NOT MILITATE AGAINST THE PROPOSITION THAT THE BENEFIT OF RELIEF U/S 10A IS I N THE NATURE OF EXEMPTION WITH REFERENCE TO COMMERCIAL PROFITS. HOWEVER, TO GIVE E FFECT TO THE LEGISLATIVE INTENTION OF ALLOWING THE CARRY FORWARD OF DEPRECIA TION AND LOSS SUFFERED IN RESPECT OF ANY YEAR DURING THE TAX HOLIDAY FOR BEIN G SET OFF AGAINST INCOME POST TAX HOLIDAY, IT IS NECESSARY THAT A NOTIONAL COMPUT ATION OF BUSINESS INCOME AND THE DEPRECIATION SHOULD BE MADE FOR EACH YEAR OF TH E TAX HOLIDAY PERIOD. SUCH LOSS IS ELIGIBLE TO BE CARRIED FORWARD. BUT, AS THE INCOME OF THE 10A UNIT HAS TO BE EXCLUDED AT SOURCE ITSELF BEFORE ARRIVING AT THE GROSS TOTAL INCOME, THE QUESTION OF SETTING OFF THE LOSS OF THE CURRENT YEA R'S OR THE BROUGHT FORWARD BUSINESS LOSS (AND UNABSORBED DEPRECIATION) AGAINST THE S. 10A PROFITS DOES NOT ARISE. IN VIEW OF THE FACT OF THE CASE AND THE RELEVANT CI RCUMSTANCES, AND THE JUDGMENTS APPLICABLE IN THE MATTER, I AM INCLINED TO AGREE WI TH THE VIEW OF THE APPELLANT / LD A,R AND THEREFORE DELETE THE ACTION OF THE LD. AO. THIS GROUND OF APPEAL IS ADJUDICATED AS ALLOWED IN FAVOUR OF THE ASSESSEE. 9. AGGRIEVED BY THE ORDER OF CIT(A) ALLOWING TH E CLAIM OF THE ASSESSEE THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNA L. AGGRIEVED BY THE ORDER OF CIT(A) IN UPHOLDING THE VALIDITY OF INITIATION OF RE-ASSESSMENT PROCEEDINGS THE ASSESSEE HAS PREFERRED THE CROSS OBJECTION BEFORE T HE TRIBUNAL. 10. AS FAR AS THE VALIDITY OF INITIATION OF REASSE SSMENT PROCEEDINGS ARE CONCERNED, WE HAVE HEARD THE RIVAL SUBMISSIONS. IN THE PRESENT C ASE, IT IS NOTICED THAT THE CASE OF THE ASSESSE IS THAT THERE WAS NO FRESH TANGIBLE MATERIA L IN THE POSSESSION OF AO AT THE TIME OF RECORDING OF REASONS FOR INITIATING PROCEEDINGS U/S.147 OF THE ACT. A PERUSAL OF THE REASONS RECORDED BY THE AO IN THIS CASE REVEALS T HAT AT THE TIME OF RECORDING OF THESE REASONS THE AO HAD EXAMINED ORIGINAL ASSESSMENT R ECORDS ONLY AND NO FRESH MATERIAL HAD COME IN THE POSSESSION OF THE AO. IN R ESPONSE TO OUR SPECIFIC QUERY ALSO, LD DR COULD NOT POINT OUT ANY FRESH MATERIAL AVAILA BLE WITH THE AO AT THE TIME OF REOPENING OF THE CASE OF THE ASSESSEE. THUS, ASSERT ION OF THE ASSESSEE THAT THERE WAS NO FRESH MATERIAL WITH AO FOR REOPENING OF THIS CASE, REMAINED UNCONTROVERTED. ITA NO.1613/KOL/2017-& CO.02/KOL/2016-M/S. BNK E SO LUTION PVT. LTD. A.Y.2006-07 7 11. IN THE LIGHT OF THE ABOVE FACTS WITH REGARD TO RECORDING OF REASONS, LET US EXAMINE SETTLED POSITION OF LAW ON THIS ISSUE. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR INDIA LTD. 320 ITR 561 (SC), HAS HEL D THAT FOR REOPENING OF THE ASSESSMENT, THE AO SHOULD HAVE IN ITS POSSESSION T ANGIBLE MATERIAL. THE TERM TANGIBLE MATERIAL HAS BEEN UNDERSTOOD AND EXPLAIN ED BY VARIOUS COURTS SUBSEQUENTLY. THERE HAS BEEN UNANIMITY OF THE COURTS ON THIS ISSU E THAT IN ABSENCE OF FRESH MATERIAL INDICATING ESCAPED INCOME, THE AO CANNOT ASSUME JUR ISDICTION TO REOPEN ALREADY CONCLUDED ASSESSMENT. THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS TUPPERWARE INDIA PVT. LTD., IN ITS ORDER DT 10-8-15 (ITA NO 415/2015 ) HAS TAKEN THE VIEW THAT THAT EVEN IN THE CASE OF ORIGINAL ASSESSM ENT ORDER HAVING BEEN PASSED U/S 143(1), IT IS MANDATORY FOR THE AO TO HAVE IN ITS P OSSESSION, FRESH TANGIBLE MATERIAL BEFORE REOPENING OF THE CASE. IN THE CASE OF CIT V S. ORIENT CRAFT LTD. 354 ITR 536, IT WAS HELD BY HONBLE DELHI HIGH COURT THAT REASONS F OR REASSESSMENT DISCLOSED THAT AO REACHED BELIEF THAT THERE WAS ESCAPEMENT OF INCO ME 'ON GOING THROUGH THE RETURN OF INCOME' FILED BY ASSESSEE AFTER HE ACCEPTED RETU RN U/S. 143(1) WITHOUT SCRUTINY, AND NOTHING MORE. IN THESE FACTS, IT WAS HELD BY THE HO NBLE HIGH COURT THAT IT WAS NOTHING BUT REVIEW OF EARLIER PROCEEDINGS AND ABUSE OF POWE R BY AO. IT WAS FURTHER HELD THAT SINCE THERE WAS NO WHISPER IN REASONS RECORDED, OF ANY TANGIBLE MATERIAL WHICH CAME TO POSSESSION OF AO SUBSEQUENT TO ISSUE OF INTIMATI ON, THEREFORE, IT WAS AN ARBITRARY EXERCISE OF POWER CONFERRED U/S 147. THUS, REOPENIN G WAS HELD TO BE INVALID ON THIS GROUND ITSELF. 12. IN THE PRESENT CASE, IT HAS ALREADY BEEN DISCU SSED THAT ADMITTED FACTS ARE THAT THERE WAS NO FRESH MATERIAL COMING INTO THE POSSESSION OF THE AO, AT THE TIME OF RECORDING OF THE REASONS. THESE FACTS HAVE NOT BEEN REBUTTE D BY LD DR ALSO. THUS, IN VIEW OF DECISIONS REFERRED TO ABOVE, REOPENING DONE BY LD. AO IN THE ABSENCE OF FRESH TANGIBLE MATERIAL, IS INVALID AND BAD IN LAW. THERE FORE, THE INITIATION OF REASSESSMENT PROCEEDINGS WAS NOT VALID. THUS, RE-ASSESSMENT ORDE R FRAMED IN PURSUANCE TO INVALID REOPENING IS ILLEGAL; THE SAME IS HEREBY QUASHED. ITA NO.1613/KOL/2017-& CO.02/KOL/2016-M/S. BNK E SO LUTION PVT. LTD. A.Y.2006-07 8 13. AS FAR AS THE APPEAL OF THE REVENUE IS CONCERN ED, WE FIND THE ISSUE WAS ULTIMATELY CONSIDERED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS YOKOGAWA INDIA LTD. (2017) 77 TAXMAN.,COM 41 (SC) BY ITS ORDER DATED 16 .12.2016 AND IN THE AFORESAID DECISION THE HONBLE SUPREME COURT TOOK THE FOLLOWI NG VIEW :- THAT FROM A READING OF THE RELEVANT PROVISIONS OF S ECTION 10A IT IS MORE THAN CLEAR THAT THE DEDUCTIONS CONTEMPLATED THEREIN IS QUA THE ELIGIBLE UNDERTAKING OF AN ASSESSEE STANDING ON ITS OWN AND WITHOUT REFERENCE TO THE OTHER ELIGIBLE OR NON- ELIGIBLE UNITS OR UNDERTAKINGS OF THE ASSESSEE. THE BENEFIT OF DEDUCTION IS GIVEN BY THE ACT TO THE INDIVIDUAL UNDERTAKING AND RESULT ANTLY FLOWS TO THE ASSESSEE. THIS IS ALSO MORE THAN CLEAR FROM THE CONTEMPORANEO US CIRCULAR NO. 794, DATED 9- 8-2000. IF THE SPECIFIC PROVISIONS OF THE ACT PROVIDE [FIRS T PROVISO TO SECTIONS 10A(1); 10A(1A) AND 10A(4)] THAT THE UNIT THAT IS CONTEMPLA TED FOR GRANT OF BENEFIT OF DEDUCTION IS THE ELIGIBLE UNDERTAKING AND THAT IS A LSO HOW THE CONTEMPORANEOUS CIRCULAR OF THE DEPARTMENT (NO.794 DATED 9-8-2000) UNDERSTOOD THE SITUATION, IT IS ONLY LOGICAL AND NATURAL THAT THE STAGE OF DEDUCTIO N OF THE PROFITS AND GAINS OF THE BUSINESS OF AN ELIGIBLE UNDERTAKING HAS TO BE MADE INDEPENDENTLY AND, THEREFORE, 'IMMEDIATELY AFTER THE STAGE OF DETERMINATION OF IT S PROFITS AND GAINS. AT THAT STAGE THE AGGREGATE OF THE INCOMES UNDER O THER HEADS AND THE PROVISIONS FOR SET OFF AND CARRY FORWARD CONTAINED IN SECTIONS 70, 72 AND 74 WOULD BE PREMATURE FOR APPLICATION. THE DEDUCTIONS UNDER SEC TION 10A THEREFORE WOULD BE PRIOR TO THE COMMENCEMENT OF THE EXERCISE TO BE UND ERTAKEN UNDER CHAPTER VI FOR ARRIVING AT THE TOTAL INCOME OF THE ASSESSEE FROM T HE GROSS TOTAL INCOME. THE SOMEWHAT DISCORDANT USE OF THE EXPRESSION 'TOTAL IN COME OF THE ASSESSEE' IN SECTION 10A HAS ALREADY BEEN DEALT WITH EARLIER AND IN THE OVERALL SCENARIO UNFOLDED BY THE PROVISIONS OF SECTION 10A THE AFORE SAID DISCORD CAN BE RECONCILED BY UNDERSTANDING THE EXPRESSION 'TOTAL INCOME OF TH E ASSESSEE' IN SECTION 10A AS 'TOTAL INCOME OF THE UNDERTAKING'. FOR THE AFORESAID REASONS IT IS HELD THAT THOUGH SE CTION 10A, AS AMENDED, IS A PROVISION FOR DEDUCTION, THE STAGE OF DEDUCTION WOU LD BE WHILE COMPUTING THE GROSS TOTAL INCOME OF THE ELIGIBLE UNDERTAKING UNDE R CHAPTER IV AND' NOT AT THE STAGE OF COMPUTATION OF THE TOTAL INCOME UNDER CHAP TER VI. ITA NO.1613/KOL/2017-& CO.02/KOL/2016-M/S. BNK E SO LUTION PVT. LTD. A.Y.2006-07 9 14. IN THE LIGHT OF THE AFORESAID JUDICIAL PRONOUN CEMENT, WE ARE OF THE VIEW THAT THE CONCLUSIONS OF THE CIT(A) IN THE PRESENT CASE CANNO T BE SAID TO BE ERRONEOUS. WE THEREFORE UPHOLD THE ORDER OF THE CIT(A) AND DISMIS S THE APPEAL OF THE REVENUE. 15. IN THE RESULT, THE APPEAL BY THE REVENUE IS DI SMISSED AND THE C.O. BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 19.0 5.2017. SD/- SD/- [DR.A.L.SAINI] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19.05.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. M/S. BNK E SOLUTION PVT. LTD., BLOCK-GI, SECTOR- V, SALT LAKE, KOLKATA-700091. 2. A.C.I.T., CIRCLE-2(1), KOLKATA. 3. CIT(A)-23, KOLKATA. 4. C.I.T.-I, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SR.PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT KOLKATA